2023 (1) TMI 922 - AT - Income Tax
TDS u/s 195 OR 192 - payment made by the assessee to certain persons is in the nature of salary as claimed by the assessee or FTS as held by the AO - HELD THAT:- Facts and materials placed on record, including the terms of the assignment agreement clearly establish that for all practical purposes the concerned persons assigned by the parent company to the assessee were working as employees of the assessee and receiving salary income. The primary factor which influenced the departmental authorities in treating the payment made as FTS for secondment of employees by the parent company to the assessee is the fact that the parent company made the payments to the concerned employees and the assessee reimbursed the cost against debit-notes issued by the parent company. In our view, nothing much can be read into this arrangement as such payments made by the parent company on behalf of the assessee is as per the contractual terms of the assignment agreement.
We hold that the payment made by the assessee towards reimbursement of expenses is in the nature of salary cost of the assigned employees subject to TDS under section 192 of the Act, hence, cannot be treated as FTS under section 9(1)(vii) of the Act and Article 12 of the tax treaty. Accordingly, there was no obligation on the part of the assessee to withhold tax at source u/s 195 of the Act. We delete the addition made by the AO. This ground is allowed.
Delayed payment of employees contribution to Provident Fund (PF) within the due date prescribed under the PF Act held that the assessee has violated the provisions of section 36(1)(va) - HELD THAT:- There is no dispute that the assessee has not paid employees’ contribution to PF within the time limit prescribed under the PF Act. It is the case of the assessee that the deduction should be allowed as the payment has been made before the due date of filing of return under section 139(1) - In our view, the aforesaid claim of the assessee is not acceptable, as now the issue stands decided against the assessee by the Hon’ble Supreme Court in case of Checkmate Services Pvt. Ltd [2022 (10) TMI 617 - SUPREME COURT]